Jersey Finance Industry Profits On The Rise

by Jason Gorringe, Tax-News.com, London

07 July 2006

The total annual profit of Jersey’s financial services sector in 2005 was 3.6% higher than in 2004, the first annual increase for five years, with most sectors of the industry anticipating higher profits in 2006, according to the States authorities.

The Survey of Financial Institutions 2005 revealed that the increase represents real growth of 1.3 percentage points above the underlying rate of inflation between 2004 and 2005. Estimated total profit for Jersey’s finance sector in 2005 was GBP1.05 billion ($1.9 billion, EUR1.5 billion).

In 2005, profits for banks rose by 3%, the first increase since 2000, whilst profits for trust and company administrators (including legal firms) and fund managers increased by 8% and 4% respectively. Profits for accountancy firms were higher than in 2004 but consistent with fluctuations seen in recent years.

About two-thirds of firms expected profits for 2006 would be higher than in 2005, a higher level of optimism than expressed in the previous round of this survey. Trust and company administrators were the most optimistic, whilst banks were the least. For 2005 three-quarters of companies predicted the correct direction of movement of their profits.

Profit per employee across the finance sector in 2005 was GBP98,000 per full-time equivalent (FTE) employee, about GBP2,000 higher than in 2004.

Total expenditure on goods and services by the finance sector was GBP473 million in 2005, about three-fifths of which was spent in Jersey. Purchases from within a firm’s own or holding company accounted for 6% of on-Island expenditure on goods and services.

The total number of FTE staff employed in the finance sector in 2005 was 150 higher than in 2004, the first increase in total employment for three years, but below the level seen in 2001 and 2002.

More than half of all firms anticipated that staff levels would increase in 2006, though less than a third of the largest employers anticipated increased staffing.

The largest single source of new employees continues to be the industry itself. Recruits from universities were up but those recruited directly from school fell. The number of people leaving the finance sector was the lowest since the survey began in 1996.

In 2005, as in the previous year, there was a net outflow of finance sector employees from the island; 195 started employment having come directly from outside Jersey, whilst 270 left the sector and the Island, a net outflow of 75.

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